ESSENTIAL PROPERTIES REALTY TRUST, INC. (EPRT) Q1 2025 Earnings Summary

Executive Summary

Q1 2025 beat consensus on revenue and EPS; revenue was $129.35M vs $124.54M consensus and EPS (Primary/normalized) was ~$0.30 vs ~$0.29 consensus, while AFFO/share was $0.45 (+7% YoY). Guidance was reaffirmed at $1.85–$1.89 for FY 2025 AFFO/share, supported by $308M of Q1 investments at a 7.8% cash cap rate and resilient portfolio metrics . Estimates marked with * are from S&P Global and shown below.*
Balance sheet strength and liquidity were key positives: pro forma net debt/Annualized Adj. EBITDAre 3.4x and total available liquidity ~$1.5B, underpinned by a March forward equity offering and expanded $2.3B unsecured credit facility .
Portfolio quality remained resilient: 99.7% occupancy, 14.0-year WALT, 3.5x rent coverage; watchlist fell to ~1.6% of ABR (down 50 bps QoQ), with Zips bankruptcy (~20 bps ABR) incorporated in guidance expectations .
Stock reaction catalysts: reaffirmed outlook without incremental equity needs in 2025, strong early-year deal flow with pricing in the high-7% cap range, and visible capital deployment runway given forward equity and revolver capacity .

What Went Well and What Went Wrong

What Went Well
- Strong top-line and EPS vs consensus and YoY AFFO growth; revenue $129.35M and diluted EPS $0.29; AFFO/share $0.45 (+7% YoY). “We have reaffirmed our 2025 AFFO per share guidance range of $1.85 to $1.89.” . EPS and revenue beat consensus (see table).*
- Robust external growth at attractive terms: $307.7M of Q1 investments at 7.8% cash / 9.4% GAAP cap rates; 90% sale-leasebacks; WALT 17.5 years; 86% from existing relationships, signaling durable pipeline .
- Capital position improved: $292.3M forward equity offering in March plus $20.6M ATM; pro forma leverage 3.4x and ~$1.5B liquidity; amended/upsized revolver to $1.0B (maturity to Feb 2030) .
What Went Wrong
- Non-cash and credit-related items persist: $5.9M real estate impairment expense and elevated D&A with portfolio growth; property expenses also increased YoY with scale .
- Forward equity dilution is a modest headwind: ~1.1M treasury-stock-method shares added to diluted count in Q1; CFO reiterated ~$0.01–$0.02 annual headwind assumption depending on share price .
- Macro/cycle uncertainties: management noted choppy capital markets and potential normalization-driven cap rate compression ahead; competition more pronounced in larger transactions, though small/mid deals remain less competitive .

Financial Results

Metric	Q1 2024	Q3 2024	Q4 2024	Q1 2025
Total Revenues ($USD Millions)	$103.50	$117.13	$119.71	$129.35
Diluted EPS ($)	$0.28	$0.27	$0.30	$0.29
FFO/share – Diluted ($)	$0.46	$0.48	$0.47	$0.48
AFFO/share – Diluted ($)	$0.42	$0.43	$0.45	$0.45
Net Income ($USD Millions, attributable to stockholders)	$46.98	$49.14	$55.37	$56.11
Net Income Margin (%)	45.4% (calc. from $46.98/$103.50)	42.0% (calc. from $49.14/$117.13)	46.2% (calc. from $55.37/$119.71)	43.4% (calc. from $56.11/$129.35)

Estimates vs Actuals (Q1 2025):

Metric	Consensus Estimate	Actual	Surprise
Revenue ($USD Millions)	$124.54*	$129.35*	+$4.82M / +3.9%*
Primary/Normalized EPS ($)	$0.29*	$0.30*	+$0.01*
Values retrieved from S&P Global.*

KPI Snapshot:

KPI	Q3 2024	Q4 2024	Q1 2025
Properties (count)	2,053	2,104	2,138
Occupancy	99.9%	99.7%	99.7%
WALT (years)	14.1	14.0	14.0
Weighted Avg Rent Coverage	3.6x	3.5x	3.5x
Tenants (count)	407	413	423
Cash ABR – Service/Experience	93.2%	93.2%	93.3%

Additional operating and non-GAAP detail:

AFFO ($mm): $85.70 in Q1 2025 vs $71.12 in Q1 2024; FFO ($mm): $92.13 in Q1 2025 vs $77.85 in Q1 2024 .
Q1 investment activity: $307.7M across 48 properties, 7.8% cash / 9.4% GAAP cap rates; dispositions $24.3M at 6.9% cap rate .
Balance sheet (3/31/25): Total unsecured debt $2.13B (WAM 3.9 yrs, 4.1% rate); pro forma net debt/Annualized Adj. EBITDAre 3.4x .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
AFFO/share (fully diluted)	FY 2025	$1.85–$1.89 (raised low-end in Q4)	$1.85–$1.89 (reiterated)	Maintained
Investment Volume	FY 2025	$900M–$1.1B	$900M–$1.1B	Maintained
Cash G&A	FY 2025	$28M–$31M	$28M–$31M	Maintained
Dividend/share (quarterly)	Q1 2025	$0.295 (Q4 2024 dividend)	$0.295 (declared Mar 7, 2025)	Maintained

Notes: Company does not guide to GAAP net income and does not reconcile forward-looking AFFO to GAAP due to uncertainty in non-cash/one-time items .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2024, Q4 2024)	Current Period (Q1 2025)	Trend
Cap rates & competition	Expect modest cap rate compression in 2025; pipeline mid-to-high 7s; increased competition as markets normalized .	“Less competition than anticipated” due to market volatility; still high-7% cap rates; pipeline supportive of upper half of guidance .	Slightly more favorable near-term competition; pricing stable in high-7s.
Portfolio credit/Watchlist	Carwash exposure rationalized; Zips (~20 bps ABR) in bankruptcy, consistent with guidance assumptions .	Watchlist ~1.6% (down 50 bps QoQ); Zips current on rent; 99.7% occupancy, collections ~100% .	Stable-to-improving credit indicators.
Capital markets/Liquidity	Pro forma leverage 3.8x; amended $2.3B facility with $1.0B revolver; ~$1.4B liquidity .	~$313M equity raised (incl. March forward); pro forma leverage 3.4x; ~$1.5B liquidity .	Stronger liquidity, lower leverage.
Forward equity dilution	Q4: ~3.2M shares in diluted count; ~$0.01 quarterly headwind .	Q1: ~1.1M shares in diluted count; ~$0.01–$0.02 full-year headwind assumption .	Headwind moderating with share price dynamics.
Dispositions & carwash	Q4 dispositions $60.4M at 7.0% cap; carwash exposure <15% soft ceiling .	Q1 dispositions $24.3M at 6.9% cap; carwash exposure 13.9% ABR; AUVs/coverage flat .	Normalized sales; exposure trending down.
Macro/tariffs	Competition rose as markets normalized .	Tariff impacts seen as tangential given 93% service/experience mix .	Limited tariff sensitivity.

Management Commentary

“We’ve started off the year on a positive note…strong execution on the investment front and resilient portfolio trends…We…reaffirmed our 2025 AFFO per share guidance range of $1.85 to $1.89.” — CEO, Pete Mavoides .
“We invested $308 million…at a weighted average cash yield of 7.8%…GAAP yield of 9.4%…pricing in our pipeline is…cap rates in the high 7% range.” — COO, Max Jenkins .
“AFFO per share of $0.45…+7% YoY…Retained FCF after dividends reached $30.1 million in the first quarter…pro forma net debt to annualized adjusted EBITDAre…3.4x…we have reaffirmed 2025 AFFO/share guidance of $1.85 to $1.89.” — CFO, Mark Patten .
“We do not need to raise any incremental capital to achieve our guidance range this year.” — CEO, Pete Mavoides .

Q&A Highlights

Macro/tariffs and industry exposure: Tariff risk viewed as tangential given 93% service/experience exposure; macro volatility reduced competition in larger deals, with small/mid-size deals less competitive .
Dave & Buster’s addition: Structured on EPRT lease form with reporting; master lease >2x coverage; pricing terms attractive given reduced competition; exposure prominence looks higher due to diversified ABR .
Watchlist and credit: Watchlist ~1.6% (down 50 bps QoQ); sub-1.5x cohort improved; any credit events are embedded in guidance .
Forward equity dilution: ~1.1M shares added to diluted count in Q1; guidance headwind modeled at ~$0.01–$0.02 for 2025 under treasury stock method .
Leverage and funding mix: Running conservative; ample buffer before leverage approaches historical mid-4x; retained FCF and forward equity fund a meaningful portion of 2025 investments .

Estimates Context

Q1 2025 results vs S&P Global consensus: Revenue beat by $4.82M (+3.9%), and EPS beat by ~$0.01 (see table). Guidance reaffirmation and strong YTD investing cadence suggest limited need to adjust near-term revenue/EPS trajectories, though forward equity dilution and cap rate normalization are modest offsetting factors.* Values retrieved from S&P Global.*

Key Takeaways for Investors

Beat-and-raise cadence sustained: Q1 delivered revenue/EPS beats and reaffirmed FY25 AFFO/share; early-year deal flow and pipeline support the upper half of investment guidance .*
High-quality, granular portfolio remains resilient: 99.7% occupancy, 14-year WALT, 3.5x coverage; watchlist down QoQ; limited tariff sensitivity given service orientation .
Capital optionality intact: ~$1.5B liquidity, 3.4x pro forma net leverage, and a fully available $1.0B revolver underwrite continued external growth without incremental 2025 equity .
External growth economics attractive: Q1 investments at 7.8% cash/9.4% GAAP yields; pipeline pricing in the high-7% cap range supports durable NOI growth .
Manageable dilution headwind: Forward equity-related dilution (~$0.01–$0.02 for 2025) is modest vs growth and balance sheet strength .
Carwash exposure rationalized; selective risk management via dispositions continues; entertainment exposure rising but within soft ceilings and underpinned by coverage .
Trading setup: Reaffirmed outlook, strong balance sheet and sustained deployment are near-term supports; monitor competitive dynamics, cap rate trends, and forward equity settlement pacing into 2H .

Citations:

Q1 2025 press release and financials
Q1 2025 earnings call transcript
Q4 2024 press release & call
Q3 2024 press release
Revolver expansion (Feb 6, 2025) ; March equity actions and dividend

Estimates note: Q1 2025 consensus and “actual” comparisons for revenue and EPS are from S&P Global; see table. Values retrieved from S&P Global.*